Shape of the brush is oval not a circle. why?
Your image texture is square but the UV mapping is not, it is wider than the actual mesh so the mapping has an opposite effect of narrowing the circles in the texture. You should check with a simple uv color grid to see what the mapping is first - but if you fix your uv mapping to be equal for the texture, then you should see the projection line up correctly.

This isn't a problem with your paint brush settings, but a texture UV mapping issue.